EUR/USD Slides Below 1.1600 After French PM Resignation; Euro Vulnerable to Further Losses

EUR/USD breaks key support amid political shock and concentrated bearish flows

EUR/USD fell through the 1.1600 level to approximately 1.1585 after French Prime Minister Sébastien Lecornu’s abrupt resignation, amplifying political uncertainty in the euro area and amid broader French political turmoil. The move comes alongside broader U.S. dollar strength — which has pushed the dollar to multi‑week highs — and fresh CME options data showing bearish euro‑vs‑dollar option trades expiring by December had roughly three times the volume of bullish trades. Together these drivers leave the euro vulnerable to additional downside in the near term.

What moved the market

Three primary forces are driving the current sell‑off:

1) Political risk: The unexpected resignation in Paris increased risk premia on EUR assets and widened focus on potential short‑term policy uncertainty.

2) Options flow: CME data showing concentrated bearish option positions with December expiries suggests market participants are hedging or betting on further EUR weakness — a structural tailwind for dollar appreciation.

3) USD momentum: Broader dollar strength (near 9‑week highs against a basket of currencies) is pressuring EUR crosses and contributing to technical breakdowns on EUR/USD charts; related drivers are summarized in coverage of USD strength from ISM.

Technical outlook

The short‑term technical setup favors sellers:

- Current trading zone: ~1.1585 after the break below 1.1600.

- Immediate pivotal support: 1.1580–1.1560; a confirmed daily close below this band would likely accelerate losses toward initial downside targets at 1.1527 and a deeper target near 1.1391.

- Resistance: 1.1648 (100‑day SMA) and 1.1700. Momentum remains bearish while price trades below these moving averages and the 14‑day RSI is showing room to decline.

Risks and alternate scenarios

Key risks that could invalidate the bearish case include rapid political clarity in France, a calming of French/German bond spreads, or a stronger‑than‑expected US data print that reverses intraday USD momentum. Conversely, a sustained USD rally or additional negative European data would likely reinforce the downside trajectory.

Trading ideas and risk management

Given the current flow and technicals, tactical strategies traders might consider:

- Momentum short EUR/USD: Trade short on rallies toward 1.1650–1.1648 with tight stops above the 100‑day SMA, targeting 1.1527 and 1.1391. Keep position sizing conservative to manage event risk.

- Put-option strategies: Use short‑dated puts or put spreads that align with the concentrated bearish options flow (bearing in mind time decay and implied volatility spikes around political events).

- Range approach: If EUR/USD stabilizes between 1.16–1.1650, consider range‑trading discipline with clearly defined stops and profit targets until a directional breakout occurs.

Related moves: GBP/USD and cross‑rate implications

GBP/USD has also pulled back to a two‑week low as the USD strength continues. Comments from the Bank of England’s Catherine Mann — highlighting elevated UK inflation expectations near 4% and markets pricing no rate cuts until around April 2026 — also weigh on sterling. Traders looking for cross‑rate plays may find short GBP/USD attractive on continued USD momentum, while selective cross opportunities (e.g., tactical long GBP/JPY) can be considered where sterling shows relative strength versus low‑yield currencies.

How automated tools and structured execution help

Event‑driven breaks and concentrated options flows create fast, high‑volatility windows. Using automated trading infrastructure can help traders execute strategies with precision and discipline. For forex markets, a dedicated Forex Trading Bot can implement momentum shorts, scale risk, and maintain pre‑defined stop and take‑profit rules. A trade management layer such as the Trade Assistant Bot can automate hedging, trailing stops, and position rebalancing to limit emotional decision‑making during volatile sessions.

Practical checklist before entering a EUR/USD short

- Confirm daily close below 1.1580–1.1560 for momentum confirmation.

- Use a defined stop (e.g., above 1.1648) and manage lot sizes to limit downside exposure.

- Consider using options to cap risk or structure asymmetric payoff if volatility is elevated.

- Monitor related headlines (France cabinet developments, German activity data, Fed Chair comments) that could cause rapid reversals.

Conclusion

EUR/USD’s break below 1.1600 on heightened French political risk and concentrated bearish option flows increases the odds of further euro downside in the near term. Traders should favor disciplined, risk‑managed short strategies while watching pivotal technical levels at 1.1580–1.1560 and resistance at 1.1648/1.1700. GBP/USD remains sensitive to the same USD strength and BOE guidance, offering complementary trade ideas.

If you want to test structured execution for momentum and options strategies, consider using automated trading tools to enforce risk rules and speed execution — whether you trade spot forex or other markets. Learn more about automated solutions on PlayOnBit and explore tailored bots for disciplined forex trading and faster order entry.

Ready to apply these setups with execution discipline? Try automated bots and the trade assistant to automate entries, manage risk, and monitor 24/7 market signals.